Exercise $13-4($Algo$)$ Special Order Decision $[$LO$13-4]$

Imperlal Jewelers manufactures and sells a gold bracelet for $$407\mathrm{.}00.$ The company's accounting system says that the unit product

cost for this bracelet is $$270\mathrm{.}00$ as shown below:

The members of a wedding party have approached Imperial Jewelers about buying $26$ of these gold bracelets for the discounted price

of $$367\mathrm{.}00$ each. The members of the wedding party would like speclal filigree applied to the bracelets that would increase the direct

materlals cost per bracelet by $$13.$ Imperlal Jewelers would also have to buy a speclal tool for $$457$ to apply the filligree to the

bracelets. The special tool would have no other use once the special order is completed.

To analyze this special order opportunity, Imperlal Jewelers has determined that most of its manufacturing overhead is fixed and

unaffected by varlations in how much Jewelry is produced in any given perlod. However, $$14\mathrm{.}00$ of the overhead is varlable with

respect to the number of bracelets produced. The company also belleves that accepting this order would have no effect on Its ability

to produce and sell Jewelry to other customers. Furthermore, the company could fulfill the wedding party's order using its exIsting

manufacturing capacity.

Required:

What is the financlal advantage $($disadvantage$)$ of accepting the special order from the wedding party?

Should the company accept the speclal order?